Reference no: EM132825863

TRUE OR FALSE

A Risk Manager needs more information than just the loss frequency and loss severity to assess the risk exposure of their firm.

Risk Pooling is the ability to reduce the risk of a unit by making more accurate predictions about a large pool of units.

Homogeneous Risk Characteristics refer to the concept that the parties in a pool exhibit the same level of risk.

The variance is independent of the shape of the probability distribution.

The range of values found by adding and subtracting three standard deviations to the mean of the random variable accounts for 99.74 percent of the area under the curve.

The Risk Charge represents the error arising from estimating a known variable.

The formula for the confidence interval is Estimated Mean + Estimated Standard Deviation.

The confidence interval increases with a larger pool size.

Large employers with a large number of employees often use pooling to self-insure some of their risk.